Sterling Forecasts: Pound Euro / Pound Dollar Exchange Rates Predicted To Fall

Modified: Friday, 27 September 2013 09:49 BST - Written by John Cameron

STORY LINK Sterling Forecasts: Pound Euro / Pound Dollar Exchange Rates Predicted To Fall

Two disappointing data sets held back Sterling during yesterday’s trading. The Pound euro and Pound Dollar exchange rates are now forecast to fall.

The Pound US Dollar exchange rate (GBP/USD) is currently trading down by 0.26% at 1.6039 GBP/USD. The US Dollar Pound exchange rate is currently trading at 0.6235 USD/GBP.

The POUND STERLING (GBP) struggled to assert itself against the other majors during yesterday’s trading day thanks to a lacklustre set of UK growth figures, released during the early part of the European morning session.

However, there was another less instantly obvious data set, published at the same time as the finalised UK Q2 GDP growth numbers, which accentuated the downward pressure on the British unit; UK Current Account numbers for the three months leading up to the end of June also fell short of analysts’ expectations. The Import/Export figures showed at significantly below the consensus expectation of analysts at a dismal -£13.0bn. The mamouth trade gap came at a time when Sterling was down on its uppers against most of the other most actively traded global currencies, (Q2 saw the GBP EUR exchange rate trade down into the 1.1300s while GBP USD slumped into the 1.4000s).

The weak relative value of the Pound at this stage lowered the comparative cost of UK shipments into foreign markets, giving British exporters a competitive edge in global markets. With the Pound struggling, foreign imports into Britain should have been priced out of domestic markets, so yesterday’s lame Current Account data points to severe structural problems with the UK economy – hardly good news for a previously resurgent Pound.

Economists’ concerns regarding the sustainability of Britain’s tentative economic recovery could knock the momentum out of the sharp improvement in the GBP EUR and GBP USD exchange rates which the past two months have yielded. For this reason, Sterling is forecast to trade on a NEUTRAL TO NEGATIVE footing moving forward.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts